{"id":15944,"date":"2016-01-03T19:54:56","date_gmt":"2016-01-04T00:54:56","guid":{"rendered":"http:\/\/olduvai.ca\/?p=15944"},"modified":"2016-01-03T19:54:56","modified_gmt":"2016-01-04T00:54:56","slug":"puerto-rico-is-greece-these-5-states-are-next-to-go","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=15944","title":{"rendered":"Puerto Rico Is Greece, &#038; These 5 States Are Next To Go"},"content":{"rendered":"<h3 class=\"title\"><a href=\"http:\/\/www.zerohedge.com\/news\/2016-01-03\/puerto-rico-greece-these-5-states-are-next-go\" target=\"_blank\">Puerto Rico Is Greece, &amp; These 5 States Are Next To Go<\/a><\/h3>\n<div class=\"tabs\">As Wilbur Ross so eloquently noted, for Puerto Rico\u00a0<strong>&#8220;it&#8217;s the end of the beginning&#8230; and the beginning of the end,&#8221;<\/strong>\u00a0as he explained\u00a0<strong><em>&#8220;Puerto Rico is the US version of Greece.&#8221;<\/em><\/strong>\u00a0However, as JPMorgan explains, for some states the pain is really just beginning as\u00a0<strong>Municipal bond risk will only become more important<\/strong>\u00a0over time, as assets of some severely underfunded plans are gradually depleted.<\/div>\n<div class=\"node\">\n<div class=\"content\">\n<p>Wilbur Ross discusses Puerto Rico&#8217;s debt struggles and where it goes from here&#8230;<\/p>\n<p><iframe loading=\"lazy\" src=\"http:\/\/www.bloomberg.com\/api\/embed\/iframe?id=VhEbRXK0Ql6OFtdEXvXg2w\" width=\"300\" height=\"150\" frameborder=\"0\"><\/iframe><\/p>\n<p>But, as JPMorgan details,\u00a0<em><strong>Muni risk is on the rise for US states, but broad generalizations do not apply (in other words, these five states are &#8216;screwed&#8217;)&#8230;<\/strong><\/em><\/p>\n<p><strong>The direct indebtedness of US states (excluding revenue bonds) is $500 billion.<\/strong>\u00a0 However, bonds are just one part of the picture: states have another trillion in future obligations related to pension and retiree healthcare.\u00a0 In the summer of 2014, we conducted a deep-dive analysis of US states, incorporating bonds, pension obligations and retiree healthcare obligations.\u00a0\u00a0<em><strong>After reviewing over 300 Comprehensive Annual Financial Reports from different states, we pulled together an assessment of each state\u2019s total debt service relative to its tax collections, incorporating the need to pay down underfunded pension and retiree healthcare obligations.\u00a0\u00a0<\/strong><\/em><\/p>\n<p><strong>While there are five states with significant challenges (Illinois, Connecticut, Hawaii, New Jersey, and Kentucky)\u00a0,\u00a0<em>the majority of states have debt service-to-revenue ratios that are more manageable.\u00a0<\/em><\/strong><\/p>\n<p>As a brief summary, we computed the\u00a0<strong>ratio of debt, pension and retiree healthcare payments to state revenues<\/strong>.\u00a0 The blue bars show what states are currently paying.\u00a0 The orange bars show this ratio assuming that states pay what they owe on a full-accrual basis, assuming a 30-year term for amortizing unfunded pension and retiree healthcare obligations, and assuming a 6% return on pension plan assets.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Puerto Rico Is Greece, &amp; These 5 States Are Next To Go As Wilbur Ross so eloquently noted, for Puerto Rico\u00a0&#8220;it&#8217;s the end of the beginning&#8230; and the beginning of the end,&#8221;\u00a0as he explained\u00a0&#8220;Puerto Rico is the US version of Greece.&#8221;\u00a0However, as JPMorgan explains, for some states the pain is really just beginning as\u00a0Municipal bond [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1719,11414,195,200,1167,8838,1022,9989,11413,566,11415,3824,11416,4318],"class_list":["post-15944","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bond","tag-connecticut","tag-debt","tag-default","tag-greece","tag-hawaii","tag-healthcare","tag-illinois","tag-kentucky","tag-new-jersey","tag-pension-plans","tag-puerto-rico","tag-wilbur-ross","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15944","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=15944"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15944\/revisions"}],"predecessor-version":[{"id":15945,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/15944\/revisions\/15945"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15944"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15944"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15944"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}